IoT Leaders: From M2M to IoT: Driving Innovation

Podcasts

Does your company have a VP of IoT? You might want to think about creating one.

As IoT continues to grow, the role you and your company can play in advancing offerings within the internet of things grows as well.

In this episode of IoT Leaders, Nick Earle talks with Andreas Haegele, VP of IoT at Thales, an organization dedicated to cutting through the complexity of IoT.

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Transcript

Intro (00:01):
You’re listening to IoT Leaders. A podcast from Eseye that shares real IoT stories from the field about digital transformation swings and misses, lessons learned and innovation strategies that work. In each episode, you’ll hear our conversations with top digitization leaders on how IoT is changing the world for the better. Let IoT leaders be your guide to IoT digital transformation and innovation. Let’s get into the show.

Nick Earle (00:30):
Welcome to the IoT Leaders podcast with me, your host, Nick Earle CEO of Eseye. On today’s podcast, I’m delighted to be joined by Andreas Haegele, who’s the VP of IoT at Thales. Andreas, welcome.

Andreas Haegele (00:44):
Nick, thank you very much. Thanks for having me.

Nick Earle (00:46):
Yeah, you’re very welcome. Tell us a little bit about your role at Thales. What does VP of IoT really mean?

Andreas Haegele (00:54):
Yeah, so I’m running the IoT business inside Thales, and I’ve been doing that for quite a while. Maybe a bit of background to who we are. So originally, our business is stemming from the very old days at Siemens that decided to divest from communications, then it became Cinterion®, which is still our trademark or brand. And we were acquired by Gemalto, so most people probably know us by Gemalto.

Nick Earle (01:20):
Yeah. I was going to say, they probably know Gemalto more, I guess. Was the Thales acquisition relatively recent?

Andreas Haegele (01:24):
We are Thales since April of last year. So yeah, fairly recent. But now we are transforming the business, and for myself, I’ve been running the product marketing. I was the portfolio manager for a long time. Then I became sales. So I know the light side and dark side of the business. And now I’m running the whole thing.

Nick Earle (01:49):
I won’t ask you to define which one’s light and which one’s dark. We’ll carry on. Because, we’ll have a mixture of engineers and salespeople listening to the podcast. But yeah.

Andreas Haegele (01:59):
Technology is always something that you can agree on, right?

Nick Earle (02:03):
Yeah.

Andreas Haegele (02:04):
And over the years we started from a purely a cellular modem business and we have evolved, with the acquisition by Gemalto we got access to SIM technology and SIM management, and of course all the aspects of security to bring trust to the ecosystem. And today we tie that together with all the elements of industry that Thales is serving, making it the quiet competitive, appealing set up for the industrial IoT.

Nick Earle (02:34):
So before we dive in with the first point that I want to talk about, which is all to do with how we got our predictions so wrong in IoT. But before I get there, we asked you to be our first guest on our podcast. So congratulations, but also because Thales is such a huge player. And just in case there’s anybody out there who doesn’t actually understand what a big player you are in IoT. I mean, if you just take instance your module or your SIM card business, can you give us some numbers on a global basis just for our listeners to realize just how big a player and how credible a player you are in this space?

Andreas Haegele (03:12):
Yeah. I think the number that resonates best is that we have like more than 200 million devices in the field out there that are connected using our technology. That is for the cellular modems. And then when you think about devices that are relying on Gemalto SIM technology, that’s in the billions of course it includes the cell phones and everything else that uses SIM cards, not only industrial IoT devices, but we have a fairly strong footprint in the industry. And, I think we know what we are doing.

Nick Earle (03:46):
Yeah. I think that’s called German understatement, fairly strong. Billions will do. So, talking about billions let’s dive in here. And this is the mea culpa side from the IT industry to the users. And I must admit I played a role in this. So let’s go wind the clock back. In 2011, many people, and I was at Cisco at that time, and not just Cisco, but Ericcson and many others, we confidently predicted by 2020, there’ll be 50 billion things connected. And you know, we weren’t talking about cell phones, we were talking about things, and here we are 2020 and the results are in, and it’s 11 billion. And that’s a hell of a miss. The IT industry often misses forecasts, mainly overestimates, but not normally by that amount. So you’ve been involved in this area, you’re a big player in this area, you’ve been involved for many years. What’s your take on how collectively… Why have we not got to 50 billion? Because clearly the potential, everybody gets the potential of IoT. So, what went wrong?

Andreas Haegele (04:54):
Well, first of all, I would say you weren’t wrong, except for the timing. I strongly believe in the 50 billion and they will soon be reached. But what we saw is that especially the cellular space is a very complex ecosystem because you need to have a good lineup of several parties that contribute to a successful IoT solution. And we were actually, by those days, if you remember well, in 2011, we were still speaking about M2M, machine to machine. It was not called the IoT as of yet. And machine to machine meant we were operating closed systems. So we were enabling individual use cases. And the acceleration started with a mention of IoT where we are now connecting subsystems to what is the Internet of Things. But with the emergence of the nternet of Things, new aspects did arise that the industry didn’t pay enough attention in the early days, which is probably security, because the moment you go from a point to point, a single party to a multi-party system, there’s a lot of other aspects that you need to consider.

Andreas Haegele (06:07):
And then another say a slow down of the ecosystem is the regional fragmentation. We had a lot of players that were actually working on distributed applications in various geographies with different regulations that apply, different mobile network operators to support the business, the different requirements in terms of cellular technology, sunsetting, one technology here, another one rolling out there. And then a lot of the momentum got lost into the exchange of technology, like migrating applications from 2G to 3G, where you would otherwise just continue to roll out based on new technologies.

Andreas Haegele (06:49):
So what we saw is a lot of fragmentation, technical hurdles to be worked security aspect, as I mentioned, fragmented mobile network operator, landscape with limited global offerings. Then last, not least lack of experience where the community started on a do it yourself. And in these days, we actually also saw the emergence of public cloud infrastructure that gained a lot of momentum, but it forced the industry to readjust again and move their, otherwise proprietary applications, into public cloud infrastructure. So all that took more time than probably initially anticipated. And this is why we didn’t see the 50 billion in 2020. But now as we’re getting to there we will definitely.

Nick Earle (07:44):
You know what, I’ve been in and around IT… It’s confession time now. I’ve been in and around it for 40 years. And if I put myself in the shoes of the user, I guess it’s small concilation when we talk about all the fragmentation and the complexity, and you could almost make the case to the user saying, guys, why can’t you get this complexity out as an ecosystem? Why can’t you get interoperability? Why can’t you get standards? And, my own view on it is that in particularly with regard to IoT… I mean, first of all technologies start off as proprietary because VC is from technologies and they compete with each other. And then ultimately you get the inflection point when you get interoperability and defacto standards occur. So this is a very well-trodden path and it hasn’t happened yet in IoT, which is essentially a summary of what you just said.

Nick Earle (08:41):
But one of the reasons why it hasn’t happened yet is that we’ve been… Is that many of the customers we have, in Eseye we have 2000 IoT customers, and many of them when they come to us, it’s their first IoT project. And they think that it… Their job is to distribute food or to do healthcare devices, or to do EV charges. They’re not module device connectivity specialists. And there’s a feeling that, well I already have ubiquitous connectivity. I mean, I have a mobile phone and it seems to work. And surely it’s just an extension of that. It’s a piece of electronics with modem in and perhaps a screen with a SIM card, but actually clearly it wasn’t like that. There was way more fragmentation. I mean, in the mobile phone market you have like seven or eight big providers. You don’t switch the networks as much as you can deal with downtime, connectivity gaps in the connectivity.

Nick Earle (09:36):
And so what we actually realized that building from just a straightforward consumer base, it wasn’t like that. IoT was like starting again, particularly on the devices side. And for our listeners, that’s why between the two of us, and if we can do a quick advertorial here, that’s why we created the Intelligent Cloud Connect offering. Wasn’t it? Because from your point of view, you have the modules, the Cinterion® range. And from our point of view, we have the ubiquitous connectivity and the native hyperscale cloud connection. And maybe just so listeners can have some ideas, a brief overview, to solve these issues of friction and complexity, we actually tried to really simplify things with the first zero-touch connectivity offerings in the market. Maybe, it’s a chance for the quick advertorial on what we did.

Andreas Haegele (10:28):
So I once said in an interview, I said, “My mission is to cut through the complexity of the IoT.” And even a friend of mine at ARM, he said, “Hey, can I use that quote? Because it describes it really well.” Our mission is to simplify the IoT, because we will see the volume growth only once. It’s easy to adopt by people who are not specialists in our space. And that’s the justification of all existence, that we are here for. So, working with Eseye, it’s just bringing two parties together that are extremely complimentary in that space.

Andreas Haegele (11:04):
So the ubiquitous connectivity, as you mentioned, for us on the hardware side and to have it pre-integrated in a cloud offering, those are the three elements that every IoT application needs. And yeah, if you ask me personally being part of Gemalto, now Thales, security is always the other aspect that is horizontally needed in any type of application, be it medical, be it track and trace, be it public safety to different degrees., But that’s also another element. And having that either soft out-of-the-box, which is what we have in our terminal, that we are promoting together, that is integrated into the AWS cloud. And also your platform that is a quick starter to anybody who wants to go IoT and wants to have all problems solved upfront. Or then the building blocks that go into that solution that can be integrated in different applications. That’s really our contribution to the reduction of complex in the space.

Nick Earle (12:08):
Okay. So it sounds like we’ve made progress as an industry and between our two companies we’ve made some progress on reducing complexity, certainly at the module layer, having ubiquitous global connectivity, it just connects out-of-the-box. You don’t need to think about it. You can connect anywhere, any square meter of land adequately. Yeah. Where the underlying complex mobile network operated landscape, as you pointed out is quite a complex changing beast.

Nick Earle (12:39):
But also this idea of security where if you can actually store the security certificates in the module, then what will happen is you can use the hyperscale cloud guys for your policy management. I mean, that’s one of the things AWS bring, is centralized policy management with deployment to the edge around things like anomaly detection behavior. So it’s really a three-way cooperation with Thales and AWS. So, given that maybe I ask the question, which typical use cases and customer segments do you market to? Because, you’re not selling just to end users or just to people who build products. From your point of view, the definition of customer is quite a few different segments. Isn’t it? Different needs.

Andreas Haegele (13:25):
That’s right. Yeah. I sometimes refer to it as the zoo, where you have everything from fish to elephant and birds.

Nick Earle (13:35):
Very diverse.

Andreas Haegele (13:37):
With very different requirements.

Nick Earle (13:38):
So what’s in the zoo?

Andreas Haegele (13:40):
What’s in the zoo? So a big element for us is the automotive space. And that’s a very well established vertical. And so is also smart energy. And here is where we see not just adoption of IoT today, but then there are other areas. So what we see as a emerging strong market is the e-health right now. So great momentum here.

Nick Earle (14:02):
Particularly at the moment, of course.

Andreas Haegele (14:04):
Particularly at the moment. So when we saw that during the COVID days, other businesses suspend, the e-health just went through the roof. It was an incredible performance this year. And that one is here to last. Also safety, home alarming, also driven by COVID. You will be surprised, but you see that as people stay home, you would say, okay, nobody can break into the home, but people use a lot of time to refurbish their places and adding security, personal security to homes has been a trend in this year. That will also continue. Agriculture just starting now.

Nick Earle (14:44):
Especially, particularly with the… When you saw the ubiquitous connectivity, because the mobile networks or consumer cellular, the cell towers are placed near where the people are. So when people say they have 95% coverage, it’s coverage of people. But, the real question to ask is that, what do you have coverage by square foot of planet earth, of land? And actually agriculture of course by definition is whether people aren’t. And so that’s where ubiquitous connectivity is particularly important.

Andreas Haegele (15:16):
And here we saw people experimenting with a license free technology. At some point, if you want a certain service level agreement or certain quality level of your IoT application, then you will soon realize that cellular is the best technology that you can have.

Nick Earle (15:36):
They’re lower cost, but not as high quality. I’ll tell you an area that we’ve seen. You talked about healthcare, agriculture, others. An area that we’ve seen, which I believe is also being accelerated by COVID is actually smart vending. And let me give you an example. When one of our customers is Costa Express, which is part of the Costa Coffee chain, now bought by Coca-Cola. But Costa have a vending machine, which is one square meter footprint, which has 90 sensors inside it. And they call it the barista without a beard. And the reason they call it that is that it delivers a highly personalized experience, like a barista. You walk into your local store, hey, Andreas, how are you doing? Your normal cappuccino, whatever medium. But actually it does it through the machine. You identify yourself with your QR code to get your loyalty points, and then it knows who you are.

Nick Earle (16:34):
And so it can personalize the experience. But what’s interesting about it is a disruptive business model. It not only delivers you a great cup of coffee, but in that one meter footprint, they don’t have any stores that you won’t find a Costa machine in a costume store. You’ll find it in a BP garage or a convenient store. And so they can enter a country within 24 hours, put machines in, plug them in, start serving coffee, selling coffee. But they’re not paying for the square footage and they’re not topping up the milk or topping up the coffee. Somebody else is doing it because it’s inside somebody’s store. So what you get there is a new form of retail, smart retail, which actually is disruptive because in this case versus Starbucks, it’s not about putting a physical store on every street corner. It’s about having a point of presence or a smart retail machine all over the place in other people’s outlets or in a hotel room or whatever. And so I believe, that what’s happening during COVID is a lot of disruptive business models are really being accelerated.

Andreas Haegele (17:39):
I totally subscribe to that. And what you just mentioned is probably only the beginning in two aspects. So we are very big in the POS, the point of sale business as well. And we are working with our partners there on very innovative solutions that involve biometrics as in facial recognition or Iris recognition, Iris scan or fingerprint. Those are technologies that we also own that we have in our portfolio as we secure the border crossings around the world. And to combine that into cellular, you open up a whole lot of new possibilities to know your customer much better, and also to do transactions contactless. That’s the one aspect. And the other aspect that I wanted to mention is we have not touched upon that as a service type of business models. Because, what we see today is that the traditional and forget business that many companies pursued in the past is transforming into more hybrid models.

Andreas Haegele (18:42):
The one that you mentioned today, you don’t own the shop floor. You have a solution or service that you’re offering. And, you can also let the one who gives you the real estate participate in your business on a success basis. So either hybrid models or completely as a service oriented, where the hardware, the initial investment completely goes away and transforms into a subscription over the life cycle. So you could even think of smart energy that becomes a complete subscription model, or, yeah my famous example is the connected toothbrush where you define a price that the brushing teeth is refill for a year. And then under that framework, you get always a replacement brushes and so on. And you get hints about how well you brush your teeth and you can become a part of a brushing community, and you can share the data with your dentist and, you know.

Andreas Haegele (19:39):
I think it sounds crazy today, but that’s the future of the Internet of Things. And then we are in a multi connected ecosystem where if you take toothbrush again, it’s such a good example because everybody has one. I hope. Well, you get automated replacement for your brushes. You can exchange the data with your dentist and the company producing toothbrush learn so much about the customer needs that it can continue to improve their products.

Nick Earle (20:14):
But what you’re saying, and there is a but here, is that when we talk about digitization of business processes, next-generation business processes, and I’m a great believer that we’re seeing acceleration now, like we’ve never seen before, we’re really talking about products becoming services or information about how a product is being used as more valuable than the product itself. So CapEx goes to OPEX. So data is the new oil. Whichever one you’re talking about, it’s about the experience and the product is just a way of delivering the experience. But I just want to put the challenge on the table. I was at Cisco, as you know, for many years. I ended up running the cloud program for the company. And, it was all about, in those days, trying to persuade people that the hardware used to be hugely important, but with cloud, you just need a browser or a laptop or even a cell phone.

Nick Earle (21:07):
And you don’t need to think about servers anymore because it’s all in the cloud. And everyone started thinking, oh maybe Marc Andreessen was right. Software was going to eat hardware. And it’s the end of hardware. There’s just going to be five big, huge server farms in the world, in the dark with red lights. And suddenly all this hardware is going to go away. But the world we’ve just described is actually a world where hardware is hugely important again. I mean, hardware actually is the most important thing. You, build an experience with hardware. But here’s the challenge.

Nick Earle (21:42):
All these companies that are making products, they all want to turn products into services. They don’t know anything about hardware. I don’t know anything about hardware. When I wanted my mobile phone, I just bought a mobile phone. I didn’t have to design my mobile phone, but now you’re talking about the cost of coffee machine or the intelligent toothbrush or the EV charger or whatever it is, suddenly as a user I’ve got to think about designing a piece of hardware. It seems to be that we’ve suddenly gone 180 degrees, and suddenly we’re asking people to solve a problem they thought they’d left behind them. Have we just created another barrier to IoT?

Andreas Haegele (22:25):
No, no, no. I don’t really think so. But, I couldn’t have explained it any better than you did. So, the business models of tomorrow, they leverage data and are transactional. But to get to there, there’s a piece of hardware needed. And sometimes people say, hey, hardware is not sexy. I’m okay with that. But we love to solve the problem. I take it even a level further. I always compare our business to plumbing, right? So is plumbing an exciting thing? Probably not. But what if plumbing doesn’t work well? What if your plumber has done something wrong in your house? And that’s exactly the problem. And we have seen so many of our customers or prospect, sometimes only prospects. They didn’t become a customer eventually because their business models failed as they-

Nick Earle (23:18):
Because, of this. Exactly. Yeah. And, as I mentioned, we have 2000 customers. When they come to us, 80% of people when they first come to us, come to us because they had a previous attempt to doing IoT and failed. And 80% of the reasons that they failed were hardware reasons.

Andreas Haegele (23:39):
Grateful customers are the best customers in the world.

Nick Earle (23:44):
Once you know what not to do, you need some help. Yeah.

Andreas Haegele (23:46):
Exactly. Yeah. We have also seen that the customers went away and said, we went into something new. We can do this better by ourselves, and then came back and they are very happy and loyal customers now. So it’s really… A couple of things that come to my mind immediately. So the one thing is in our space, typically we are dealing with remote assets, and remote asset, that’s the biggest difference to a smartphone. Because, if your smartphone doesn’t work, you reset it, you switch it off and on, and it works again. But that coffee machine that you mentioned, that is sitting at a BP station somewhere in a country where you have no service set up, it has to function. Otherwise, your business model doesn’t work. And then there is no revenue stream. And then there is no customer satisfaction.

Andreas Haegele (24:41):
And then the whole thing doesn’t work. So, it’s the reliability aspect that we’re taking care of. And the second point is, and looking at you, I mean, if you have a business model that involves different types of countries and you want to have ubiquitous global connectivity, you can try to set that up by yourself. Fine. It’ll take you a long time. And then the landscape will continue to change and evolve. And, you better make sure that you keep pace with that. And you update all your agreements and so on and so forth. Or you talk to a specialist who’s doing that for a living, right? So we do the hardware. You do the ubiquitous connectivity.

Nick Earle (25:22):
Yeah, I mean, you described our value proposition, and that’s why they come to us the second time round. Because they thought it was easy, they then find themselves managing 20 mobile networks and thinking about 2G shut off and battery preservation for devices. And eventually people say, you know what, it’s just too complicated. I want to sell coffee. I don’t want to be a hardware company. And maybe that’s a way we can sort of draw it to a conclusion, and then say, okay, so this is interesting. We’ve come full circle. We’ve now realized that hardware is cool again. So everything goes around in a circle in life. We all know that. So now hardware is cool again and important. And actually, we also now realize why it’s called hardware because it’s hard. So it is hard, but if you get it right, you can deliver phenomenal experience.

Nick Earle (26:11):
If you deliver a phenomenal experience, that’s the way you compete in the new normal. So let’s finish by asking each other to name one customer or partner who you believe is sort of innovative in this space. And actually I’ve got a second reason for asking it, it’s a series of podcasts. And it’s almost like asking you, who should we approach to talk about this? Because I think this whole area of how do you create innovative hardware when you know nothing about hardware, how do you create a hardware driven experience when you have no intention of ever understanding hardware? I think that’s worth a podcast on its own. So do you have a company that you work with that you see is really innovative in terms of creating experiences for customers? Because, that’s what people really want. They want to create an experience. It just happens to be delivered by hardware.

Andreas Haegele (27:01):
Yeah. We have plenty of partners, of course, but if I would highlight one for this podcast and it’s probably Sigma Connectivity in Sweden. Because it’s a company and a partner to us that’s been reinventing itself over and over again. And they are extremely professional in their help. They think like we think. They believe in the longevity aspect, into the reliability aspect, and that it’s better to invest brain power and energy and efforts in the beginning, in order then to enjoy a long and successful business journey afterwards. So the reason why I’m also recommending them is because we’ve been working together. We’ve been together handholding a lot of customers in that space, and it’s always been successful. So if you cannot rely on a standard solution that we are offering out-of-the-box and you want to go to the next level and you want to break it into the individual pieces and make it fit your application, then that’s certainly a partner that I can recommend.

Nick Earle (28:06):
Okay, that’s great. You know what, I’m going to reciprocate with… As you’ve used a Swedish example, I’m going to use a Swedish example. Because we do end user projects, and I’m going to give one of my favorite projects, which always makes people smile when I say, would you believe. Would you believe that there’s such a thing as an IoT enabled nappy or as our American friends would call it, a diaper, and everybody immediately thinks of something else, which this isn’t. It’s not measuring. What it’s doing is it’s actually for the care home business. So, Essity is the world’s second largest paper company. They’re based in Gothenburg in Sweden. And they’re number two to Pampers worldwide. And this is the adult incontinence markets. So people in care homes who… One of the interesting stats is that very few people die in care homes. They die in hospital.

Nick Earle (28:58):
One of the most common reasons for going to hospital is because you get ill. And the most common thing that you get is a water infection. So in other words, a urine infection is a direct contributor to people dying in care homes. So people have incontinence diapers, and the problem is they start to feel uncomfortable, but they don’t tell the staff because they may have dementia or Alzheimers, or just older people are so proud. They don’t tell people that they’re feeling sick. And so what Essity have done, and this product’s available, you can buy it. There is a small wafer in between the paper of the diaper that measures the chemical constituents of the urine. And basically does an alert that says, this person is exhibiting early signs of a urine infection, so that they can actually get tablets to them, antibiotics or a doctor to them before either, A, they know they’ve got an infection or B, the infection takes hold. Net effect is people live longer. And when people live longer, the business cases, the care home collects more fees.

Nick Earle (29:59):
Of course, from a relatives point of view, it means you can access data via the app and check that your relatives are healthy. But the adult incontinence market is actually a billion dollars a year market. And so, I mean, there’s a great example. In my case, my mother was in a care home when she was alive, with dementia, and she wore an adult nappy, and I wish a care home had had this product, but that’s a wonderful way where IoT really does make a difference in the lives of people. And I think as an industry, we talk a lot about technology and standards and acronyms and software and hardware, but when you actually can really bring it to life, and literally in this case, you know, extend the life of people through IoT, then we know that it’s worth solving these complexity issues because we’re actually making a real contribution to society.

Nick Earle (30:53):
So I’m actually going to pause that because I don’t think we can beat that. I think whatever we say after that, we’ll bring it down for our listeners.

Andreas Haegele (31:01):
You’re right.

Nick Earle (31:01):
That’s the big inspirational finish. So let me do the wrap-up. First of all, thank you so much for being inaugural guest on the podcast. I really appreciate it. And for our listeners, please tune in again. We’re going to be having a series of these, very regular series of these podcasts. We’re going to be looking at different elements of IoT, and we’ll mix it up with some vision as we have here, are some practical advice and some case studies of where we’ve seen that IoT is really making a difference. And we hope it becomes a place to go, a destination for people to get the advice and the insight they need to navigate through this world of IoT.

Nick Earle (31:39):
Because as Andreas said, right at the beginning, the 50 billion things wasn’t wrong, it was the timing that was wrong. We will get there. And, if we can share advice and tips and hints on how to get there, then we hope that this podcast has been useful for everybody. So thanks again, Andreas. And to our listeners, I’ll talk to you again on the next episode.

Andreas Haegele (32:01):
Thanks Nick. Absolute pleasure.

Nick Earle (32:01):
Thank you.

Andreas Haegele (32:01):
Thank you.

Outro (32:04):
Thanks for tuning in to IoT Leaders. A podcast brought to you by Eseye. Our team delivers innovative global IoT cellular connectivity solutions that just work, helping our customers deploy differentiated experiences and disrupt their markets. Learn more at eseye.com.

Outro (32:25):
You’ve been listening to IoT Leaders, featuring digitization leadership on the front lines of IoT. Our vision for this podcast is to be your guide to IoT and digital disruption. Helping you to plot the right route to success. We hope today’s lessons, stories, strategies, and insights have changed your vision of IoT. Let us know how we’re doing by subscribing, rating, reviewing, and recommending us. Thanks for listening. Until next time.